Besides the previously announced spin-off of PayPal, eBay plans to lay off 7% of its workforce and explore the sale of its technology division. The company announced the plans today along with its fourth quarter financial results, including a 3% increase in U.S. marketplace sales, far short of holiday online sales growth.

The value of merchandise sold on eBay Inc.’s U.S. marketplace, excluding vehicles, increased 3% year over year in the fourth quarter of 2014, the online marketplace operator says today. EBay also says that it experienced a “decline in new users” during the quarter because of changes in how Google ranks retail sites in natural search results and fallout from a 2014 password breach.

The latest financial figures come as eBay prepares to kick PayPal out of the nest and let it become its own company in the second half of 2015. The online marketplace operator today also says it will reduce by 7% the size of its global workforce—shedding some 2,400 workers, resulting an an eBay-estimated savings in 2015 of more than $300 million—and “explore” an initial public offering or sale of its eBay Enterprise e-commerce technology division. “Looking forward to 2015, we will be simplifying organizational structures to focus the businesses and ensure that we are set up to compete and win,” eBay says in a statement.

The 3% growth in fourth quarter sales on eBay’s U.S. marketplace is likely well below the growth of e-commerce as a whole, as comScore Inc. has estimated sales—just from computers—grew 15% in November and December, and likely more when mobile transactions are counted. EBay had been consistently reporting double-digit percentage increases in recent years, except for a 7% increase in U.S. marketplace sales in the third quarter of 2014, when eBay first began to register hits from the Google changes and the theft of customer passwords.

For the fourth quarter ended Dec. 31, eBay reports:

• The value of merchandise sold worldwide on eBay, excluding vehicles, was approximately $21.849 billion, up 1.6% from $21.503 billion a year earlier. About 61% of marketplace sales, or approximately $13.33 billion, came from outside the United States, the same rate posted for the same period last year. That leaves about $8.519 billion in value for U.S. purchases. While U.S. marketplace sales increased 3%, international sales grew only 1%.

advertisement

• Net revenue for eBay marketplaces in the fourth quarter hit $2.332 billion, up 4.4% from $2.299 billion for the same period in 2013.

• EBay marketplaces gained 2.9 million buyers in the fourth quarter compared with 3.4 million buyers gained in the third quarter. For the full year, eBay ended up with 14.9 million new marketplace buyers to give it 155 million total.

• Active users of eBay’s payment services, which include consumers with PayPal and Bill Me Later accounts, totaled 162 million at the end of 2014, up 13%. PayPal gained 4.6 million new users in the fourth quarter of 2014.

PayPal revenue increased 17.8% year over year to $2.163 billion from $1.836 billion. PayPal’s payment volume grew 23.7% to $64.296 billion from $51.973 billion for the same period in 2013.

advertisement

• Net revenue from the former GSI Commerce Inc., now named eBay Enterprise, totaled $443 million for the fourth quarter, up 8.8% from $407 million a year earlier.

• EBay’s net revenue increased about 8.6% to $4.921 billion in the fourth quarter compared with $4.530 billion in the same period the previous year. 

• EBay says it had a net income of $936 million in the quarter. That compares with net income of $850 million in the same period in 2013, a 10.1% increase.

“In a year of unexpected events and distractions, we ended 2014 with double-digit revenue growth, solid earnings growth and strong cash flow, reflecting the fundamental strengths of our company,” says John Donahoe, president and CEO of eBay Inc. “PayPal had another strong quarter, finishing an excellent year. eBay, while facing challenges, continues to be a great business and is focused on stabilizing performance and engaging its core customers. Looking ahead, our plans are on track to separate eBay and PayPal into independent companies in the second half of 2015, and we are confident this is the right strategic path for each business.”

advertisement

Among those events and distractions in 2014 were:

Hackers in May attacked an eBay database storing 145 million encrypted passwords and other “non-financial data.”

• The impacts of an update to Google Inc.’s Panda search algorithm that represented a further effort by Google to reward high-quality web sites with better rankings in organic search results, and which moved many eBay listings down in Google search results. “EBay’s loyal customers are back following the reset of our passwords, but our more occasional customers have not returned as quickly as expected in Q4,” Donahoe said today during a conference call with analysts. “And the SEO changes significantly diminished eBay’s presence in natural search results, which impacted new user growth in the second half and had a cumulative effect on Q4 results.” Marketplace sales also suffered from from a “stronger dollar [impacting] eBay’s cross-border trade, depressing U.S. exports and affecting Q4 results for North America. In total, we simply underestimated the combined effect of these events on eBay’s ecosystem. And these events occurred in a more competitive environment, where e-commerce and omnichannel players are upping their game.”

• An ugly public feud with investor Carl Icahn over the future of PayPal, a dispute that eventually led eBay to agree to spin off PayPal, the scheduled exit of five top eBay executives and—eBay says today—the appointment of Icahn Capital executive chairman Jonathan Christodoro to eBay’s board of directors.

advertisement

EBay also says that its eBay Enterprise division “has limited synergies” with either the online marketplace or PayPal.

“2015 will be another challenging year, and we expect eBay’s performance to soften further before we see stabilization and improvement,” Donahoe said during the call. “We still have work to do.”

For the full year 2014, eBay reports:

• Net revenue of $17.902 billion, up about 11.6% from nearly $16.047 billion for the same period in 2013.

advertisement

• A net loss of $41 million compared with net income of $2.856 billion the previous year.

 

Favorite